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How to Convert a Sole Proprietorship to an LLC in California (2020)

If you want to convert a sole proprietorship to LLC in California, you can do so with my help. I am well-versed in all types of entity formations. Therefore, I can assist you in making this type of business conversion.

Just email me at sam@mollaeilaw.com anytime. I can guide you in making a change that will protect you legally and financially.

Usually, converting a sole proprietorship to LLC in California will bode well for you, as it will enable you to make money with less legal and financial worries. The idea of making this change is to protect you from getting sued and to protect your personal assets. 

 

How Setting Up an LLC Can Help

When you set up an LLC with my help, you can do the following:

  • Limit liability
  • Manage your business more easily
  • Enjoy pass-through taxation, or pay taxes on your personal tax returns, avoiding problems with double taxation
  • Enjoy added privacy, if you incorporate in Wyoming
  • Hold appreciating assets without worries – such as real estate, intellectual property, or stock portfolios
  • Allocate profits and losses to LLC member in varying amounts

When you contact me at sam@mollaelilaw.com, I can give you further details about converting a sole proprietor to LLC in California. I know all the details about making this type of transition.

Therefore, you can be assured that you will enjoy enhanced benefits when you make this type of change.

 

What Is an LLC?

Before you convert a sole proprietorship to an LLC in California, you need to define an LLC – LLC is short for a limited liability company. This business entity provides limited liability protection and flow-through taxation and exists as a separate entity from the owner(s). In turn, the owner(s) cannot be held personally liable for business debts or liabilities. 

Owners report their business income on their personal tax returns in accordance with the interest they hold in the company. While an LLC costs more to create and oversee than a sole proprietorship, it still saves you from any future liability. 

A sole proprietorship is easy to form and does not cost you much to operate. You do not have to pay filing fees or franchise taxes or fees.

You can begin operating the business right away. However, when you operate in this manner, your personal assets can be seized or taken if a business client sues you and you lose the case.

You avoid this type of problem when you convert a sole proprietorship to an LLC in California. I can also help you convert a sole proprietorship to an LLC in Wyoming.

This is an ideal state in which to form an LLC, as the fees are much less and your future expenses are lower. 

We can get together to formulate a plan. All you need to do is email me at sam@mollaeilaw.com when you decide to make the transition. The sooner you do so, the sooner you will be protected financially and legally.

 

How to Convert a Sole Proprietorship to an LLC in California Effortlessly

To convert a sole proprietorship to an LLC in California seamlessly and effortlessly, you simply need to learn what it takes to form an LLC. Again, besides creating the LLC in California, you can also set it up in a state, such as Wyoming, that offers many benefits, with respect to expense and privacy.

However, if you wish to have a prevailing influence in California, you should switch from being a sole proprietor in California to operating as an LLC. 

 

Choose a Name for Your LLC Business

To begin the process of conversion, you need to select a name that is already not on the database of business names in the Secretary of State’s (SOS’s) records. As a sole proprietor, you may operate under a doing business as (DBA) name now and may want to operate under a new LLC legal name.

You will need to perform an LLC name search to see if the desired name is available. Reserve a name if you are not quite ready to file an LLC application yet. I can also conduct a trademark search of the desired name to prevent problems with intellectual infringement or confusion in use. Contact me about the search at sam@mollaeilaw.com

 

Why You Need to Select a Registered Agent When Converting a Sole Proprietorship to an LLC in California or Another State

Next, you need to select a registered agent if you wish to convert a sole proprietorship to an LLC in California or elsewhere. Doing so will help you receive important legal notices and tax paperwork while you form your LLC and after its creation. 

A registered agent, also known as an agent for service of process, receives and conveys all the documents related to your LLC, including any communications mailed by the Secretary of State’s (SOS’s) office. 

You should choose a registered agent other than yourself to ensure that any time-sensitive materials are received and handled. The registered agent you choose should possess a physical address in the state the LLC is formed, and not a PO box.

 

Preparing the LLC Operating Agreement

Next, you need to prepare an LLC operating agreement – an agreement that is required in almost any state an LLC is formed. This agreement demonstrates the LLC’s separate existence and permits you to define what should happen if you can no longer operate the LLC.

Even if the LLC has only one member—you—this document needs to be drafted and completed.

If your LLC is a multi-member LLC, you need to make sure that everything about the division of ownership is clearly indicated, including how disputes will be handled. It should offer details about who has the authority to do certain tasks and when a vote is required for specific transactions.

The operating agreement should also include how membership interests should be transferred, how distributions should be made, and how the LLC’s profits and losses will be divided. Also, the agreement should include how new members will be added. 

You should always have a well-qualified business attorney, such as myself, review the operating agreement to make sure you cover everything you need. If you require this type of help, you can contact me anytime at sam@mollaeilaw.com

 

Filing the LLC Paperwork with the State of California

To make your LLC official, you need to file certain documents with the SOS’s office. These documents include a Certificate of Formation and Articles of Organization. You should also submit a filing fee. Once the LLC is approved, the state will issue a confirmation document. This document serves as proof that the LLC exists.

 

What To Do Next

Once you have this proof, you can open a business bank account. To do so, you will also need to obtain an employer identification number (EIN). I can help with this part of the process as well. In fact, I can help you with preparing the LLC operating agreement and guide you through all the steps of converting your sole proprietorship to an LLC business in California. Contact me today at sam@mollaeilaw.com for all the details. 

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